financing for startups

Are you looking for financing for your startups but you don't know the existing possibilities? Fortunately, you have options beyond bank loans. Next, we will detail a series of ways to financing for startups.

How does a startup work?

The fact that you have accessed this post probably means that you already know what a startup is and how it works, but for those who don't, it is worth clarifying that the term startup is used in new or early generation companies, which present high growth potential. Furthermore, it should be noted that these types of companies are developed around a technological base and are associated with innovative ideas.

The management and organization of startups is usually made up of specialized professionals from different sectors. These professionals try to maintain fluid and profitable contact with clients, but since they are not, at this early stage, large or well-known companies (at least for the moment), they do not have the necessary resources to be able to undertake marketing campaigns aimed at attracting customers.

In this sense, Internet It is constituted as a fundamental tool, since it allows startups greatly increase your visibility, reaching a large number of users, and all of this in a very economical way.

Sources of financing for startups

Once we have explained what a startup is and how it works, we are going to show you the different existing funding sources for this type of organizations, so that you know sources of alternative financing for the development of your businesses.

Business Angels

The business angels They are individuals who invest their own capital in emerging companies. Generally, in exchange for this contribution, they request shares in the companies in which they participate. 

However, the contribution of these individuals is not reduced to financial capital, but rather They also contribute with knowledge that they consider appropriate for the proper functioning of the company in which they invest.

Two reasons can be distinguished why business angels carry out these operations:

• Benefit: Not only for them, but also for the entrepreneurs of the companies they work with.
• Altruism: Sometimes, it is enough for business angels to see that the startup is growing, and that it is doing so thanks to their help.

Crowdfunding

He crowdfunding can be defined, essentially, as the participatory financing of a project, such as the project on which a startup is based. In the case of this type of alternative financing, it is contact between patrons is rare, which may have non-profit or non-profit with the contributions they make.

exist different versions of crowdfunding, such as donations, loans, shares, reward financing and reward donation

Crowdlending

Through the crowdlending, an individual performs a capital loan for a business project, in addition to setting some interest on capital borrowed. From this description, one can perceive its fundamental difference with crowdfunding, which is nothing more than individuals who carry out crowdlending actions always do so with lucrative purpose.

Factoring

He factoring It is a financing modality consisting of advance invoice collection of clients for the purpose of obtain liquidity necessary in the short term. Different Individuals lend their money to companies, assuming themselves the outstanding collection rights.
Therefore, in addition to being able to advance the payment of these pending invoices, through factoring startups have the possibility of being able to outsource collection management in process.

Confirming

He confirming consists of specialized financial entities can be used as means of payment by companies. These entities manage the payments that companies have with their suppliers, and when the debt expires, through check or bank transfer, said debt is canceled.

Bank loans

We believe that this tool is already widely known by everyone. Even so, mentioning that bank loans are loans that banks grant to companies (obviously, also to individuals). In addition to delivering the amount corresponding to the loan, the bank requires the borrower to pay interest, which is the way in which these entities obtain profits in these operations.

Conclusion

How to obtain the necessary capital is a decision of enormous relevance for any company. But in the case of startups, it is especially notable since they enter the market with capital needs, and the way in which these needs are met determines their survival.

If you have a business project that requires financing to be able to function, at Alter Finance we are experts in the different sources of financing. alternative financing existing. If you need additional help regarding the financing for startups, contact us without obligation.